A pet agreement can reduce a landlord's risks in a pet-friendly building. Here's what to include in the agreement.

Many landlords allow tenants to keep pets in their rentals. They do so because they love pets, or see benefits to their property -- like a broader pool of tenants, or reduced tenant turnover (because pet owners have fewer options). However, allowing pets on your property can pose risks, from additional property damage to pet-induced injuries. Here's how you can reduce the risks associated with pet-friendly rentals.

Include a "Pet Agreement" in the Lease

You can reduce the additional risks created by having pets on your property by creating smart pet policies, putting them into a "pet agreement," and including the agreement as part of your lease. (Your lease should refer to the pet rules and incorporate them as part of your lease.) This provides notice to tenants that their continued tenancy depends on honoring these rules.

Require that all tenants sign the pet agreement, even non-pet owners. That way, if a tenant gets a pet later, she already knows what the rules are and what is expected if she wants to stay in their apartment.

Here are some common provisions to consider including in your pet agreement.

Policy 1: Identify the Types of Pets Allowed

Your pet agreement should specify which types of pets are allowed. Some landlords allow only common domesticated animals such as dogs, cats, birds, fish, guinea pigs, rabbits, hamsters, gerbils, and small reptiles. The agreement should also specify any limit to the number of pets allowed.

"Dangerous" dog breeds. Some landlords ban certain dog breeds that many people believe have a propensity toward violence, such as pit bulls and Rottweilers. Although the question of whether certain breeds are truly dangerous is a topic of controversy, landlords are legally entitled to ban these breeds from rental property. (Fair housing laws apply to human beings, not to dogs.) Before you allow such breeds, check with your insurer. Some companies won't issue liability policies if certain so-called "dangerous breeds" are kept on the property.

Click here to learn more about the landlord's liability for tenants' dogs.

Weight limits. Instead of, or in addition to, banning certain breeds, some landlords limit the weight of dogs. For example, a landlord might only allow dogs under 20 pounds.

Tenants' pets only. In your pet agreement, make it clear that you allow only tenants' pets. You don't want your tenants caring for other people's pets in their rental unit. Also specify whether you will allow guests to bring their pets with them while visiting tenants.

Policy 2: Allow Only Pets You Approve

Excerpted FromEvery Landlord's Property Protection Guide

Learn more about pet policies and how to protect your rental property investment.

Require that tenants get your approval for any pet they wish to keep in their apartment. You may wish to forego this approval requirement for certain types of pets that you don't think will cause problems or trigger complaints, such as goldfish.

Finally, state that your approval is conditioned upon the tenants' continued compliance with the terms of your pet agreement. Make clear that you have the right to ask the tenant to remove the pet from your property or terminate the tenancy in the event of serious or repeated violations of the agreement.

Policy 3: Require Proper Identification, Licenses, and Vaccinations

Make sure tenants understand that all dogs and cats must wear identification collars or tags, which include proof of current vaccinations. Learn what your local ordinances require concerning regular cat and dog vaccinations and licenses, and insist that tenants give you current proof that they've complied (such as a copy of their municipal license receipt or the vet's bill).

Policy 4: Make Tenants Responsible for Their Pets

Tenants should agree to keep their pets under control at all times, so that they don't disturb other tenants and their guests. Require tenants to clean up after their pets, both inside their apartment, and in all common areas and other parts of your property. Tenants should also agree not to leave pets outdoors or unsupervised in their apartment for an unreasonable period of time, and to keep pets in appropriate, contained areas within their apartment. For example, small reptiles such as lizards should be kept in terrariums and birds should be kept in cages.

To further reduce the risk that a tenant's pet will cause injuries to other tenants or their guests, consider requiring your tenants to carry renters' liability insurance (assuming your state and local law allow it). If you do require this insurance, be sure the policy covers damage caused by pet accidents and that it doesn't contain a dog bite exclusion or other such limitation.

Policy 5: Consider Charging a Pet Fee

Many landlords routinely impose a "pet fee," in addition to the normal security deposit, reasoning that pets typically cause added wear and tear to an apartment. Think carefully before implementing such a policy, for these reasons:

A fee might not be legal. In some states, such as California, landlords cannot charge more than a specified sum as a deposit. This sum covers the total of all types of deposits. So, if the total amount of the deposits that you charge to all tenants has reached the maximum, you cannot charge a pet deposit on top of that.

A fee might not be a good idea. Setting aside a certain sum as a deposit to cover pet damage isn't always practical. Suppose a pet is well-behaved but the tenant who owns the pet is a slob. If part of the deposit is marked for pet damage only, you might not be able to use that money to clean up the tenant's mess. Often, it's better to impose a non-specific deposit.

A fee might be unreasonably high. If you decide to impose a specified pet deposit, keep it reasonable, such as $200 to $300 per year. Otherwise, if your tenant challenges it, a judge may not enforce it.

Finally, do not impose a pet deposit or fee for a tenant who keeps a service or companion animal. Such animals aren't pets -- they are animals needed to accommodate a disability.

Make it Easy to Change the Pet Agreement

From time to time, you may want to change your pet policy. For example, you may decide to no longer allow cats. So that you can easily make a change, state in your pet rules that you have the right to amend the rules by giving tenants reasonable notice (typically 30 days).

Consider a grandfather clause for pet policy changes. A "grandfather clause" exempts tenants already in the building from having to comply with the new rules for pets they already had before the changes took place. The rules would apply to any new pets they get. Without a grandfather clause, some tenants might have to get rid of a pet that no longer complies. This is certain to trigger considerable resistance.